How to choose your co-founder

What makes a good co-founding team? How can you quantify the success of a business relationship? How do you transform a partnership that’s veering off course?

In a 15-year qualitative study and a quantitative study into the attitudes and motivations of entrepreneurs, Fingerprint for Success has uncovered distinct patterns in the interests and preferences of those who achieve venture success and those who struggle.

This world-first research assessed 48 motivations of some of the world’s most successful entrepreneurs and analysed them for correlations with venture success—and, equally important, attitudinal blind spots found to be statistically significant in entrepreneurs who experienced venture failure.

These findings give entrepreneurs a huge advantage when choosing their co-founders and business partners. This study also looked at business partnerships up to 20 years old over a range of businesses, including those that had been sold in multi-million dollar business exits and those that had failed.

There are many reasons why business partnerships fail, including:

• Conflict
• Bottlenecks
• Disappointment
• Misunderstandings
• People being ousted from their own companies
• Feelings of being betrayal by investors and boards

A business partnership can present a variety of difficulties, however, our research found that multi-million dollar business exits were more likely to arise from a partnership than a sole founder.  

So what are the critical ingredients of a successful business partnership—one that allows each partner to shine and the business to flourish?

From 20 years of case studies in working with hundreds of different entrepreneurs, these are our highlights:

The hallmarks of a healthy partnership

• Trust and dialogue

No second guessing. You each know that the other is operating with the interests of the business at the forefront and you have the safety to disagree.

• Mutual respect for uniqueness  

You recognize that you each have differences that complement each other, and don’t undermine or compete with each other.

• Productivity and results

While you have different styles, you both get the job done—individually and together. And it shows: you’re feeling the synergy and reaching your business milestones.

If this is what a healthy partnership looks like, how do you cultivate and foster one?

Align your ‘why’ and ‘how’

First, sit down with your prospective co-founder and find out what your vision and intentions for the business are. Ask questions like:

• Why do you want to be in this specific business?
• Why do you want to do it together? Why not do this alone?

• Is this business a stepping stone to a deeper passion?

• How long are you happy to drive this business?
• What type of returns are you looking for?

Next, consider how you want to achieve that vision:

• What does this business stand for? What culture do we wish to create?

• Are there competing priorities that might prevent us getting it done? Family, other businesses or a full-time job?

Remember, Alignment is not a box to tick at the beginning but something you do regularly and at each major decision point.

Try this: To learn more about alignment, check out Peak by Chip Conley.

Learn about your emotional intelligence

There are three elements to emotional intelligence

• Self-awareness and humility: being able to name and acknowledge your motivations and blind spots and celebrating those of others
• Communication: a good business partnership requires responsiveness, transparency and clear decision making
• Tolerance: practice tolerance for others’ preferences and motivations

Self awareness, communication and tolerance are the lubricant that allow you to be very different in business style and also to harness and embrace the power of that difference.

Try this: Weekly catch-ups and individual and joint coaching sessions; joining YPO or EO or a similar forum. Reflection is key to building emotional intelligence.

Recognise achievements together

• Set goals yearly and quarterly and recognize and celebrate achieving them with each other and the team.

• Effective goal setting is also found in co-founders who have longevity and fulfilment in their partnerships.

Our research found that a very high focus on goals, achievement and recognition is correlated with venture success.

Try this: Implement a tradition that recognizes wins—even small ones. Some people are highly motivated to receive recognition, and it doesn’t have to cost anything.

What are the warning ‘red flags’ of a dysfunctional partnership?

• You naturally like sole ownership and responsibility and find it really hard to share responsibility.  
• You do not trust the person to be able to operate in the best interest of the business
• You do not have alignment in vision and values
• You do not have the trust required for robust dialogue  
• You are identical in skills and attitudes, meaning you have similar blind spots

One of the most critical decision you will make in business will be your choice in co-founder: a dysfunctional business partnership is one of the most stressful experiences possible in business, with long-term consequences to both wealth and health.

On the other hand, a functioning partnership increases early stage traction, momentum and ability to scale, and makes the journey and tremendously rewarded and adventure shared. Making the right choice is a crucial decision that you shouldn’t only leave to your gut feeling.

Want to know where you and your co-founder clash and complement each other? Take your Fingerprint for Success find out about your motivations today.